Interesting articles that highlights the complexity of the cost / benefit analysis of green energy solutions

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Installing carbon capture and storage technology at Britain’s largest power station eventually could cost bill-payers an average £1 billion extra each year, according to estimates from a leading energy think tank.

Drax has said that it plans to spend billions of pounds on converting two of the four units at its power station in Selby, North Yorkshire, to so-called Beccs, or bioenergy with carbon capture and storage.

If the FTSE 250 group was to convert all four units, an ambition that it has outlined in the past, the cost of running the power station could rise to £1.7 billion a year, according to a new analysis from Ember. That compares with average subsidies of £785 million between 2018 and 2022.

A previous annual estimate from the think tank put the cost of converting all units at £1.3 billion and it attributed the increase to higher forecast costs for wood pellets. The estimates assume that the Beccs plant operates under a 25-year contract.

Capturing and storing carbon is an energy-intensive technology. Ember said that when added to a biomass plant, it would consume some of the heat that otherwise would be used to generate electricity, meaning that to produce the same amount of electricity more wood would need to be burnt.

Drax’s power station has converted four of its units from coal-fired generation to burning biomass wood pellets. This process qualifies for renewable energy subsidies on the basis that trees absorb carbon as they grow, offsetting the carbon emitted when they are burnt.

Drax received £617 million in such payments from energy bill-payers in 2022. However, the environmental credentials of biomass pellets, which Drax primarily ships in from North America, have long been contentious.

Claire Coutinho, the energy secretary, is expected to launch a consultation this month into a “bridging mechanism” to keep the plant running without subsidies between 2027 and 2030. The biomass subsidies end in 2027 and it is unclear whether wholesale electricity prices will be high enough for Drax to cover its input costs and to continue running without financial support.

Doubts have been raised over whether carbon capture is as beneficial to the environment as has been claimed

The government has said that it intends to put in place a dual-contracts-for-difference model to support investment in Beccs projects, linked to both low-carbon electricity and negative emissions.

Tom Harrison, an analyst at Ember, said: “If Drax’s Beccs project goes ahead, the UK energy consumer could be locked into decades of even higher bills without any guarantee that the negative emissions they are paying for are actually being delivered.”

Carbon capture and storage works by capturing carbon dioxide from industrial facilities, such as chemical plants and oil refineries, instead of releasing it into the atmosphere and contributing to climate change. Drax claims that its carbon capture units will remove eight million tonnes of carbon from the atmosphere each year and will make the power plant carbon-negative.

A company spokesman said: “This new Ember analysis veers between factual inaccuracies and a series of misguided assumptions. It also doesn’t explain the costs of replacing Drax’s reliable generation and keeping the lights on.

“Drax power station operates under the same mechanisms that almost all other UK electricity generators do. It is the largest power station in the UK, generating 4 per cent of the country’s power and 9 per cent of our renewable electricity by output, and plays a critical role in the country’s energy security.”